Where to insert query_posts($query_string in category.php?

I have query_posts on my homepage to make it look more magazine style – 1 last post from each cat, and in category archives posts display normally. 10 posts for a page. The problem is that I cant see next 10 posts,because my pagination is not working. I click on the 2 page and it brings me to Error.

I was adviced to use

query_posts($query_string

in that template. But I have no clue how and where to insert it in the loop. Here is how my loop looks now

category.php

<?php if (have_posts()) : ?>

		<?php while (have_posts()) : the_post(); ?>

		<a href="<?php the_permalink() ?>" rel="bookmark" title="Permanent Link to <?php the_title(); ?>">
<img src="<?php bloginfo('template_url'); ?>/images/<?php $values = get_post_custom_values("Image"); echo $values[0]; ?>"></a><a href="<?php the_permalink() ?>" rel="bookmark" class="title""><?php
// this is where title of the article gets printed
	  the_title(); ?></a> <?php the_excerpt() ?> 

		<?php endwhile; ?>

		<?php if(function_exists('wp_pagenavi')) { wp_pagenavi(); } ?>
	<?php else : ?>

		<h2 class="center">Not Found</h2>
		<?php include (TEMPLATEPATH . '/searchform.php'); ?>

	<?php endif; ?>

I’ve read this page https://codex.www.ads-software.com/Template_Tags/query_posts#Usage_Note
but I still dont understand what to erase from my code, where to put query_posts($query_string to make pagination work correctly.

Please help